Report #1

Today, Kapuskasing Gold Corp. announced its intent to acquire the Daniel’s Harbour Zinc Property, located on the Great Northern Peninsula of Newfoundland in Canada, approximately 10 km northeast of the community of Daniel’s Harbour.

This property (1,050 hectares) has been explored and developed by one owner, Teck Resources, after discovering Mississippi Valley Type (“MVT”) carbonates rich in zinc mineralization. Between 1975 and 1990, Teck mined about 7 million tonnes of ore averaging 7.8% zinc from the Daniel’s Harbour Mine. Characteristically, MVT deposits occur in clusters and are referred to as “districts”.

Most recently, Altius Minerals Corp. (current market capitalization: $478 million CAD) has staked up a significant land position surrounding the Daniel’s Harbour Zinc Property as can be seen in the accompanying map.

Most interestingly, the vendor of the Daniel’s Harbour Zinc Property has chosen Kapuskasing (and not Altius or another senior) in consideration of $60,000 in cash payments (only) and 1.75 million shares of Kapuskasing (current market capitalization: $2 million CAD). Apparently, the vendor sees more appreciation potential with the shares of Kapuskasing as the company has committed to a work program of a minimum of $100,000 within the first 24 months of TSX-V approval.

Figure 1: Mineral specimen from Newfoundland Zinc Mine, Daniel‘s Harbour, Newfoundland (source: Bill Morgenstern - Earth Moods)

Typically, MVT deposits are discovered in outcrops because these are not easily detectable via traditional geophysical techniques due to the lack of conductivity. As these types of deposits tend to occur in clusters, forming districts, there exists exceptional potential to discover more of such pods or lenses within the boundaries of the Daniel’s Harbour Zinc Property. Specifically, excellent discovery potential is seen in the area of the old mine workings of the historic ore bodies continuing at depth or along the favourable breccia horizon.

Jonathan Armes, President of Kapuskasing, explained:

“The Daniel’s Harbour property may have the potential to host several more high grade zinc lenses within the upper stratigraphy as well as at depth potential within the context of modern exploration methodologies. The Company is already looking into employing some modern geophysical techniques to assist in identifying potential MVT lenses and pods yet to be found.”

Individual MVT deposits are generally less than 2 million tonnes, are zinc-dominant, and possess grades that rarely exceed 10% (Pb+Zn). Some 7 million tonnes of ore were mined from several open-pits and underground workings until 1995, whereafter no significant exploration was performed. By starting to explore this property with modern exploration methods, Kapuskasing could make striking discoveries.

Zinc mineralization on the Daniel’s Harbour Zinc Property generally occurs in long, narrow, northeast trending bodies, parallel to the long axes of dolomite breccia piles and to normal faults. In the mine area, a total of 21 ‘zones’ (named alphabetically ‘A’ to ‘W’) were recognized. The largest of these was the ‘L Zone’ ore body, which consisted of at least 3 parallel bodies ranging in width from 7.6 to 24 m (25 to 80 feet) separated by narrow areas of low-grade mineralization. The L Zone extended over a length of 3,048 m (10,000 feet). The maximum vertical thickness of ore was approximately 30.5 m (100 feet). The majority of the tonnage mined at the Daniel’s Harbour Zinc Property was sourced from this one zone.

2 types of zinc mineralization were recognized in the L Zone. The first and most common type occurred as cavity fillings in a series of narrow (0.15-1.5 m) pseudobreccia beds separated by barren massive “Grey Dolomite”. Ore contacts were sharp both laterally and vertically, and the grade may change from traces to 30% zinc within a few feet.

The second type of mineralization, which was prevalent in the thickest portion of the L Zone, consisted of veins, which cut the sequence of pseudobreccia beds at various angles. The pseudobreccia beds may be barren or mineralized for a distance of 1.5 to 3 m from the veins.

The sulphide mineralization consisted almost entirely of sphalerite, with local minor quantities of pyrite, marcasite and extremely rare galena. The sphalerite was exceptionally pure and iron deficient. Impurities included only 1.3% iron and 0.18% cadmium. This purity and simple mineralogy enabled good recovery (98%) and production of premium grade concentrate (63%). Supergene alteration was minor, and limited to the top 6 m of bedrock; it consisted of secondary hematite, limonite and thin films of smithsonite on fractures.

Acquisition Terms

Kapuskasing Gold Corp. has signed a non-binding letter of intent, whereby it can earn a 100% interest in the Daniel’s Harbour Property for total consideration of 1.75 million shares, $60,000 in cash payments and a work commitment of $100,000 within the first 24 months of TSX-V approval. The vendor shall retain a 3% net smelter royalty (NSR) interest. Kapuskasing retains the option to buy back 2% of the NSR for $2 million. In the event Kapuskasing delineates a NI43-101 compliant resource of 5 million tonnes of ore grade zinc (that ore grade to be determined in the final purchase agreement), the vendor will receive a one-time bonus payment equating to $50,000 payable in cash or shares at the election of Kapuskasing on the day of which said report is filed on SEDAR. A formal option agreement will follow upon completion of due diligence. 

Figure 2: Simplified geological map of Newfoundland showing location of major zinc and lead occurrences (source: “Mineral Commodities of Newfoundland and Labrador”; R.J. Wardle, 2000)

Carbonate-Hosted Mineralization Environments

According to “Mineral Commodities of Newfoundland & Labrador” (R.J. Wardle, 2000):

“The principal mineralization environments of this type are found in the carbonate rocks of the Humber Zone that form the western margin of the Newfoundland Appalachians. Three rock units host zinc–lead mineralization in the Humber Zone, the most important of which is the Cambro-Ordovician platformal carbonate sequence that stretches from the Port au Port Peninsula in the south to the top of the Great Northern Peninsula (Figure 2). The predominant mineralization consists of sphalerite–galena and pyrite filling secondary voids as a replacement of carbonate beds and as the matrix to collapse breccias.

Generally, this mineralization is considered to be of Mississippi Valley-type (MVT) and comparable to other deposits of this type found in the western platformal sequences of the Appalachian Orogen (e.g., the lead and zinc deposits of Tennessee). Mineralization is found throughout the sequence but predominantly within the Port au Port and St. George groups (Figure 3). Sphalerite is the dominant ore mineral and was preceded by the development of a secondary porosity in association with formation of pseudobreccia. The latter is a replacement product in which “fragments” of earlier dolomitized limestone are left floating in a matrix of secondary sparry dolomite (Figure 4). Other true breccias in the vicinity of the deposits are related to solution collapse, probably in response to the local emergence of the platform and consequent karstification of the carbonate rocks below a regional unconformity.

Figure 3: Setting of Daniel’s Harbour-type zinc–lead mineralization in relation to paleo-depressions and pseudobreccia. Column at left shows stratigraphic position of Daniel’s Harbour and other MVT zinc–lead occurrences (after Lane, 1984; source: “Mineral Commodities of Newfoundland and Labrador”; R.J. Wardle, 2000)

The single major example of an MVT-type deposit was at Daniel’s Harbour, where about 7 million tonnes of zinc ore, at an average grade of 7.8% zinc, were mined between 1975 and 1990. The deposit consisted of numerous ribbon-like orebodies hosted by pseudobreccia. The orebodies were localized on the margins of structural depressions, interpreted as solution collapse structures that formed during emergence, closely associated with contemporaneous faulting (Figure 3). Sphalerite was deposited together with hydrothermal dolomite after significant burial. Reactivated faults and veins served as conduits for warm, saline brines that carried the zinc. Numerous other zinc showings outcrop in the Daniel’s Harbour area, including the Trapper prospect, where mineralization has been encountered in a widely spaced drilling program. The only other significant deposit is at Round Pond, where 152 400 tonnes of 2.5% Zn have been identified in cherty dolomite breccias and pseudobreccia of the Boat Harbour Formation (St. George Group), locally in association with bitumen-rich zones and other zinc-lead occurrences.

Figure 4: Daniel’s Harbour ore. Early, grey, burrowed dolostone has been replaced by yellow sphalerite and white dolomite, locally enclosing suspended fragments of dolostone in pseudobreccia texture (source: “Mineral Commodities of Newfoundland and Labrador”; R.J. Wardle, 2000)

“Considerable Potential For Future Discoveries”

Zinc was the most important non-ferrous metallic commodity produced in Newfoundland between 1928 and 1990. During this period, 2.3 million tonnes of the metal were produced with an in situ value of US$3.1 billion, using present day prices. Lead, apart from some early ventures, was generally produced only as a by-product of other mining operations for a total production of 1.22 million tonnes at a present day in situ value of US$556 million.

The two most important geological environments for zinc and lead mineralization in Newfoundland are the carbonate platform rocks of western Newfoundland, which host Mississippi Valley-type (MVT) deposits, and the volcanic terranes of central Newfoundland, which host numerous volcanogenic massive sulphide (VMS) deposits. Lead, and to a lesser extent zinc, also occur in a number of vein-hosted epigenetic occurrences that locally formed the basis for 19th century mining operations, but which are generally uneconomic in today’s markets.

The first recorded production of lead in Newfoundland was from vein deposits at the La Manche Mine of Placentia Bay in 1855. Attempts were made to develop other mines between 1860 and 1885; however, these were all based on small epigenetic veins and none managed any sustained period of production or profitability.

Modern mining of zinc and lead began in 1928 with the development of the Buchans volcanic-hosted deposits located in central Newfoundland. Further discoveries followed, and the Buchans operations remained in production until their eventual depletion in 1984. In the meantime, exploration in the western Newfoundland carbonate platform had led to the discovery in 1963 of the Daniel’s Harbour zinc deposit. This came into production in 1975 and closed in 1990, again following depletion of the ore reserves. Although there is currently no production of zinc or lead in the Province, there remains considerable potential for future discoveries.”



Lady Pond Copper Project




Company Details

Kapuskasing Gold Corp.
#501 - 133 Richmond Street West
Toronto, Ontario M5H 2L3 Canada
Phone: +1 416 708 0243

Shares Issued & Outstanding: 46,410,986


Canadian Symbol (TSX.V): KAP
Current Price: $0.05 CAD (05/17/2017)
Market Capitalization: $2.3 Million CAD


Current Price: €0.04 EUR (05/17/2017)
Market Capitalization: $1.9 Million USD

German Symbol: not listed

Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author does not hold any equity or other interest in Kapuskasing Gold Corp., however is being paid a monthly retainer from Zimtu Capital Corp., which company holds a long position in Kapuskasing Gold Corp.

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Name: Kapuskasing Gold Corp.
Canada Symbol: KAP
Germany Symbol / WKN: not listed
Shares Issued & Outstanding: 46,410,986
Phone: +1 416 708 0243

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